Is it a inflation in kapiworlds?

[Guest]

all things are raising.
Is it a inflation in kapiworlds?
How can the game designers solute this problem:more coins crash into the market. caps are losing their real value.

[Guest]

As People get richer, the prices will go up because the companies can charge a higher amount to sell the same product. If this was real life would u rather:

A: Sell a apple for 50cents

B: Sell a apple for 60cents but at the same quality and time spent growing the apple

Just look at history. If this is true inflation prices will soar through the roof, then every one will make their own production buildings and stop selling on the market and then everything will go back to normal

[Guest]

not really, the price of stones, pardon the expression, is fallling like a rock.
I've been trying to build in the textile area, which is not easy with all these contest clogging up my plans but the price of pullovers has fallen too.

I think it depends,
Biscuits are down,
gas seems to be real low,
eggs, cotton and wool is up,
Steel is steady

Rubber seems to be lower than what you can even make it for, so is coffee powder.

dunno about the rest.

I think the problem again is the contests, nobody is making anything else besides what the contest is for and nobody is buying anything other than what the contest is for so it screws everything up.

before the cotton contest the price was about $4 for cotton and $2.50 for wool but when the cotton contest started the price of cotton went threw the roof and the price of wool did too, since those people trying to make textiles all had to buy wool, since cotton had become too high to buy for making profit.

When the contest was for lemons the price on all other fruit rose because nobody was growing anything besides lemons, so impossible to get food for the grocery stores.

I guess just try and find out what industry the contest is in and avoid it like the plague.

Also the price of stones should always be pretty low since there is way too much stone given away at start up and it is usually sold off to fund other building costs.

[Guest]

Thank you for your two replies .
But that did not answer this question, the key word of the question is coins.

For example, If suddenly I sell large amout of coins to the system, it means the issurance of caps from kapiworld system will be enlarged.But acctually, the market does not need so much caps. This will cause the caps lose their value.

what will the game designer do at this time ?

[Guest]

For example, If suddenly I sell large amout of coins to the system, it means the issurance of caps from kapiworld system will be enlarged.But acctually, the market does not need so much caps. This will cause the caps lose their value.

Kapiworld system issues caps all the time as stores sell products to NPCs. The combined fixed assets of top 40 companies are about 4.1 billion caps. Since all production chains end up in stores where consumer products are turned into caps by selling them to NPCs, we can make a simple calculation. A ROI of 5% in 24 h would mean about 206 million caps of new money _every single day_. To have an appreciable effect, you would have to bring in new caps every day at, say, 10% of that rate, or 20 million caps. Which would cost you 40 euros per day. In actuality Kapiland economy is quite a bit larger than that, so even 40 euros per day would not cause an appreciable change.

Furthermore, if you were to use the 20 million caps to build new production capacity, you would eventually drive prices down. If you were to use the caps to purchase products from market, the prices might go up in the short run, but the increased prices would attract new manufacturers, and the prices would start coming back down.

Contests cause much larger displacements in the Kapiland economy. They have turned a static market into a much more interesting place: all contests cause direct or indirect difficulties to players who just want to manufacture stuff, and some of the posts have been quite entertaining to read.

[Guest]

Very well said Widgetry.

[Guest]

yes,Widgetry's point is that huge kapiworld economy amount will mitigate the crash of coins.
I agree with you. Thanks.

Also, I think the NPC's ability of cosume could be adjusted to mitigate the crash. More caps issued from coins, more caps issued from NPC.
Inflation is not a terrible thing, we just like to see the kapiworld looks like real world more:)

[Guest]

i can't understand dbsuma's irracional antipathy to contests

contest is the best way to redistribute the money from the largest companies to the smaller ones

they don't get anything for the money invested to contest (i mean, they don't get anything that could improve their advantage) and the smaller companies can benefit from the quick money

[Guest]

Inflation is not a terrible thing

I couldn't disagree with you more. In the real world inflation (of the money supply, resulting in increase of prices, of which phenomenon the term "inflation" is fraudulently used nowadays to hide the real reason for increasing prices) causes the following ills for an ordinary citizen:

1) Value of money (actually currency, since that's all we have nowadays) decreases constantly. Thus currency is not a good storage of value. Instead, if you want to save, it is not enough to have a bank account (the interest rates are so low that you're still losing value), but you have to invest, and it is a difficult, risky proposition.

1b) As the value of money decreases, the wages are increased. This in turn results in bracket creep: a wage-earner's real purchasing power does not grow, but his taxes increase as he enters the next tax bracket.

2) The official inflation information, "consumer price index" or CPI is so out of touch with reality that it is not even funny. CPI is based on a basket of goods, and the basket is adjusted seasonally. The content of the basket is massaged so that the inflation figures "prove" that the central bank is doing its self-caused and self-assigned job: managing the inflation rate. There is also the so-called "hedonistic adjustment": values of goods in the basket are increased in an arbitrary manner to account for their improved quality: you get a lot better TV for USD1000 nowadays than 10 years ago. This in turn lowers the CPI.

Inflation damages the economy, too: The most important function of money is to carry information to the entrepreneur: when prices of a product increase, it is a signal for an entrepreneur to enter the field or expand production. When the prices go down, the entrepreneur must cut down the production or take losses as nobody buys his goods. Inflation (of the money supply) messes up this signaling mechanism, and this results in malinvestments. These in turn impoverish us all.

So if inflation is so bad, why is it so common? To answer this question, you must follow the money: who benefits from inflation? The answer: Those interest groups who get to use the new money first, namely banks and governments. They get to make their purchases at the full value of the money (driving up the prices as the demand increases without commensurate new production). The government of the US can continue its insane deficit spending and overseas wars, as the new liquidity makes it possible for the US government to keep selling their T-bonds.

The value of the new money (and all of the old money as well) goes down over time, and the wage-earning consumer takes the hit: there is always a lag between a price increase and a wage increase.

Furthermore, the modern fiat currency is based on debt instead of a suitable commodity. It is pieces of paper or bits in a computer instead of a certain weight of, say, gold or silver. Because of this, modern currency can be debased without limits, as long as the debasement does not trigger hyperinflation (cf. Germany in the 1920s, Argentina in 1980s, Yugoslavia in 1990s, USA in 2010s...), for at that point any government falls.

[Guest]

Ah, you lost me when you got to the conspiracy-sounding part. I was on board up until then.

Deflationary and inflationary forces are at work all the time, and always as a result of the basics: supply and demand. The largest inflationary force right now, at least in the US and similar markets, is the expectation of annual increases from wage earners and dispersal recipeints. If anywhere the government is to blame, it's here where increases in social payments are not only given, but forecast well into the future, at rates that surpass any measure of CPI.

This expectation that everyone will earn more year-after-year causes a cost-push inflation effect. But it's counterbalanced by suppliers who constantly find new ways to increase effeciency and thereby provide more supply without higher prices.

The result is an inflation rate that is near zero. It's not at zero because that's a balance to perfect for reality. And also because so many people (financial officials) are terrified of deflation and want to say away from it.

Now that's from a microeconomics viewpoint. If you want to talk macroeconomics, we'll talk money supply. And I'll use the United States since you brought it up and I know it well enough.

If you think the United States has an inflation problem, you're either 4 years behind or seeing several years into the future. Speaking of currencies and the other large factors at work in macroeconomics, it's still a matter of supply and demand. Only now we're talking supply and demand of a currency.

And the reason I say that view is years behind is because since 2003 the money supply has been decreasing in the United States. It shot up incredibly fast from around 1994 to 2003 - and in that period if you'd been worried about inflation you would be right. Because of course when the Supply of dollars gets higher than the Demand of dollars, the price of dollars falls, people need more of them, and then you have inflation.

But since around 2003, the money supply has been tightened. It hasn't dropped dramatically but it certainly isn't rising. Most of the chatter I hear in that arena is much more worried about deflation than inflation. Like I said earlier, officials tend to fear that. But not because they have secret plans to print money and spend it! It's because there's only one period in the last 100 years when the US has had any deflation, and we called it "The Great Depression." And by the way, going off the gold standard to fiat in 1933 was an important part of getting out of that mess.

Now I'm not saying inflation can't be harmful. It definitely, definitely can and I wouldn't claim otherwise. But there aren't people behind the scenes pulling the strings, certainly not for the rates of 1-4% that we've seen. Inflation happens because people naturally want more money without considering their value in the market.

[Guest]

Ah, you lost me when you got to the conspiracy-sounding part.

There is no conspiracy, merely a group of men (bank owners and politicians) who have developed a subtle method to plunder from everybody with nary a squeak from the victims.

Please see http://www.mises.org/money.asp for a more detailed treatment.

And the reason I say that view is years behind is because since 2003 the money supply has been decreasing in the United States.

The US money supply has not deflated in the least. Quite the opposite. Here is the data:
http://www.federalreserve.gov/releases/ ... 6hist1.txt
It does not supply the M3 data, since Fed discontinued it last March, but M1 and M2 are quite useful, too.

Latest numbers from March indicate a 6% increase in M2 since March 2006, and the lowest figure since January 2004 has been 3.2%. Hardly a contraction of money supply, that.

Most of the chatter I hear in that arena is much more worried about deflation than inflation. Like I said earlier, officials tend to fear that. But not because they have secret plans to print money and spend it! It's because there's only one period in the last 100 years when the US has had any deflation, and we called it "The Great Depression."

From 1783 to 1913 the dollar maintained its value with a slight deflationary bias. Fed was founded on 1913, and since then the dollar has lost 98% of its value.

Sure, there was deflation after the stock market crash: the stock bubble fed by liquidity created by the central bank burst. The actual damage came from the ham-handed handling of the situation by the US government, as episodes similar to 1929's stock market crash had been weathered in six months and less on three previous occasions, when there was no Fed or FDR to muck up the recovery. Price controls and New Deal programs instituted in 1930s stretched the misery for a decade and a half until the end of WWII, at which point a significant portion of regulation was scrapped along with the war-time rationing.

Here is a nice treatment of the Great Depression:
http://www.mises.org/rothbard/agd.pdf

Dollar has maintained its value during the era of lesser Bush only because USA has been able to export its inflation: foreign governments (central banks) have been purchasing treasury bonds. Dollar has also been the world reserve currency, but even this position is eroding rapidly.

But nevermind. This has almost nothing to do with Kapilands. Back to regularly scheduled programming.

[Guest]

There is no conspiracy, merely a group of men (bank owners and politicians) who have developed a subtle method to plunder from everybody with nary a squeak from the victims.

I assume you're joking, as that's pretty much the definition of conspiracy.

The US money supply has not deflated in the least. Quite the opposite. Here is the data:
http://www.federalreserve.gov/releases/ ... 6hist1.txt
It does not supply the M3 data, since Fed discontinued it last March, but M1 and M2 are quite useful, too.

Latest numbers from March indicate a 6% increase in M2 since March 2006, and the lowest figure since January 2004 has been 3.2%. Hardly a contraction of money supply, that.

You misunderstand, but it's my fault for not saying it right. Money supply as a ratio to GDP has decreased. You can use either M1 or M2 and calculate the rates yourself with simple GDP data. Both hit a peak in the middle of 2003, though you can also see a decline into early 2000 in M1.

Again it's my fault for not expressing it right, but you can't just look at supply when we're talking supply and demand. That's why I meant the ratio of money supply to GDP.

And it's more significant because it's a reversal from the increases starting in the mid 90s and ending in 2003.

From 1783 to 1913 the dollar maintained its value with a slight deflationary bias. Fed was founded on 1913, and since then the dollar has lost 98% of its value.

If I'd been asleep for the last 94 years with a full wallet this would be quite disturbing to me. But gradual inflation is close to invisible and we're as much beneficiaries as we are victims. Things cost more dollars now than they did then, but it's also much easier to get people to give them to me. Inflation is only really noteworthy if it affects me between earning the money and using it. At 1-3% a year it's just not noticeable.

Meanwhile the Income Tax also became constitutional in 1913. That is noticeable every year. Since then we've also added on a slew of entitlement programs until we've created a society where people think they can vote themselves into prosperity. And that's hardly the only problem. Any issues I might have with the US monetary policy are dwarfed by problems with the fiscal policy.

Were we all more rational, fixing a value would make more sense. Sadly, people are quite irrational and liquidity tools are very useful for preventing bank runs, stimulating investment and preventing calamities bigger than inflation. And that's where the desire for Fed involvement stems from. There's no need to assign people ulterior motives to explain it.

Those mises.org guys are certainly wise, I agree with them much more than I disagree. And I'd never describe myself as a Keynesian. But I'm not ready to throw out everything he said either.

And may I add (and this is about as Liberal as I ever get) that a decreasing dollar can be a good thing! Occasionally someone less knowledgeable than you clearly are brings up something they heard about a falling dollar and starts thinking it's a sign of doom. I ask them this:

• Would you describe yourself as more A) someone who has dollars, or B) someone who wants dollars.

Since I don't hang out with many billionaires, they tend to say B. To which I follow with "Well if you want something, why wouldn't you want it to get cheaper?"

So a cheaper dollar helps the poor and would hurt only the rich. [/Liberal] Which is why so many of those foreign-bought Treasury bonds you mentioned were grabbed by China, who wants to keep the Yuan low.

[Guest]

Call me a spammer but I am not after a commercial degree here.... I just like it when I can sell cotton Q0 on the market for 90 caps a piece.

Inflation in my home country is very annoying. e.g. The cost of toilet paper has risen by 100% in one year. Maybe I should invest in a RL plantation or pulping mill.

When I started Kapiland, I decided to spread my investment over as many markets as possible. I didn't really know why at that time but it looks like the contests are my second biggest money spinner at this stage, steel rules. If caps where real I am sure that they would be minted out of steel.

If you want to defend against inflation you should become a monk and move to Tibet, or start producing your own contest supplies, they are sooooo profitable.

Next contest will most likely be for headache tabs Q15, all this reading

[Guest]

There is no conspiracy, merely a group of men (bank owners and politicians) who have developed a subtle method to plunder from everybody with nary a squeak from the victims.

I assume you're joking, as that's pretty much the definition of conspiracy.

Oh, okay. Then the creation of central bank and fiat money qualifies as a conspiracy, if a public one ("conspiracy" implies secrecy, doesn't it?).

Again it's my fault for not expressing it right, but you can't just look at supply when we're talking supply and demand. That's why I meant the ratio of money supply to GDP.

And it's more significant because it's a reversal from the increases starting in the mid 90s and ending in 2003.

Thank you for the clarification. That's an interesting data point, and I'll have to ponder its meaning

From 1783 to 1913 the dollar maintained its value with a slight deflationary bias. Fed was founded on 1913, and since then the dollar has lost 98% of its value.

If I'd been asleep for the last 94 years with a full wallet this would be quite disturbing to me. But gradual inflation is close to invisible and we're as much beneficiaries as we are victims. Things cost more dollars now than they did then, but it's also much easier to get people to give them to me. Inflation is only really noteworthy if it affects me between earning the money and using it. At 1-3% a year it's just not noticeable.

There is the long-term effect to consider. Inflation hampers the working of economy by skewing and falsifying economic signals. If this inefficiency is mere 1%, without it the GDP would have grown 2.5 times larger than it is now over 94 years. At 2%, the multiplier is 6.3. At 5% it's whopping 93. This is what the creators of central banking and constant inflation have robbed from _everyone_. This is the real cost of inflation.

When the compliance costs with overwhelming, everchanging, arbitrary regulation are factored in with the effects of inflation, the inefficiency could very well be 5%.

Were we all more rational, fixing a value would make more sense. Sadly, people are quite irrational and liquidity tools are very useful for preventing bank runs, stimulating investment and preventing calamities bigger than inflation. And that's where the desire for Fed involvement stems from. There's no need to assign people ulterior motives to explain it.

Bank runs used to be an important check on bank operations: if a bank issued more notes than it had reserves (committing fraud), and the creditors of the bank (people who had savings in the bank) got wind of it, the resulting bank run drove the fraudulent bank to bankruptcy, unless it could loan sufficient reserves to avoid defaulting. Nowadays fractional reserve banking, as it is called, is quite legal, and yet another way to increase the money supply (for every dollar that a bank receives from the central bank to its reserves, it can lend out seven, ten, or zillion (Canada with its zero-reserve requirement).

Stimulating investment: I'd rather say, stimulating malinvestment. Inflation skews the price information, and entrepreneurs make incorrect decisions resulting in malinvestments. Without inflation there would be less malinvestment.

Calamities bigger than inflation: Could you tell me a calamity worse than inflation? An extinction-level asteroid strike, perhaps?

Ulterior motives: The motivation for legitimization of fractional reserve banking and fiat money system can be explained by simple application of praxeology, the science of human action. A man can only live either by producing or by plunder. If you choose to live by plunder, you'll try to find the safest and easiest way to do it. Fractional reserve banking and fiat money system definitely fit this bill: hardly anyone seems to either understand or care the enormity of the fraud perpetrated on the rest of the society by the creators and perpetrators of these systems.

Those mises.org guys are certainly wise, I agree with them much more than I disagree. And I'd never describe myself as a Keynesian. But I'm not ready to throw out everything he said either.

Keynes was a hack, plain and simple. He wrote a pseudo-scientific treatise that served political purposes, which is why he was put on a pedestal and other schools of economic thought were shouted down.

So a cheaper dollar helps the poor and would hurt only the rich.

The rich do not keep their money in currencies, but in real wealth: real estate, industry, stocks and bonds, whatever. It's the poor and the middle-class whose little fortunes are in currency, since they do not have the time or inclination to learn the things that you have to learn to be able to invest profitably. The inflation (and onerous taxation) are an efficient method to keep the rabble down.

I wonder if anybody else reads these posts

[Guest]

Inflation in my home country is very annoying. e.g. The cost of toilet paper has risen by 100% in one year. Maybe I should invest in a RL plantation or pulping mill.

Or maybe you should try to find out which field of business brings in the most profits in your home country or globally, invest in that one and buy the toilet paper with your profits.

100% is nothing compared to Zimbabwe: one piece of toilet paper costs more than the lowest-denomination Zimbabwean bank note... talk about hyperinflation: 2,200% in March of 2007.